ItsMoneyMark Newsletter #86

REGENCY Petroleum, IPO Closes Swiftly, adds to the Energy Sector on the JSE

As expected, the IPO – Initial Public Offer closed early, and closed on, November 25, 2022. 

The IPO was a small one, and the market really likes and enjoys this equity fundraise sizes, more so than the large ones. The real “alpha” tends to be in these SMEs or the smaller IPO offerings, J$ 200 to 500 MM or the Juniors. 

Regency Petroleum joins FESCO on the market, as a comparable in the lucrative energy sector. 

FESCO recently announced it would be expanding into the cooking gas market (“LPG”) in 2023, with the successful raise of its corporate bond via NCB Capital Markets, its leader broker, for approximately J$ 1 billion. 

Regency Petroleum, per its prospectus, stated that, it is opening a gas station in Q4 2022, and plans to expand to another in 2023, and already operates in the cooking gas market (“LPG”) and distribution of fuels as a petroleum marketing company. 

A takeaway for sure, is, on the JSE – Jamaica Stock Exchange, we have several important sectors, including, (i) financial services, (ii) manufacturing, (iii) distribution, and many others that have taken time to develop over the past few decades, carefully and steadily. 

Jamaica has always had an energy sector, but now with these companies making their affairs public, like financial services, and other critical sectors to any Country, energy, and “energy security”, are becoming a very significant sector to get into. 

It is clearly taking its position in our capital markets, and the JSE, front and centre. 

Market Moves:

  • ISP Finance Services Limited (JSE: ISP) enters the fundraise space to keep up in the Micro-credit, Microfinance sector, that has really been heating up in 2022, especially the past 3-6 months. 

ISP has announced to the JSE – Jamaica Stock Exchange that it has been successful in raising J$ 470 million, via a Bond issuance, that will mature on November 22, 2025. Therefore a 3-year debt instrument, and we await the coupon, or the interest rate to be disclosed. 

As of September 30, 2022, ISP closed their 3rd Quarter, with net loans of provisions for credit losses of J$ 679.1 million with cash & cash equivalents of J$ 78 million, totalling J$ 757.1 million. Adding this new debt fundraise, and potential profitability for the 4th Quarter, ISP is well on its way to achieving and surpassing a loan book of J$ 1 billion. 

ISP’s most recent market cap, was approximately, J$ 1.5 to 1.6 billion. 

  • NCB Financial Group Limited (JSE: NCB FG), sees some “company insiders” get into the action in their shares. As we have mentioned in the headliner of a previous ItsMoneyMark newsletter, NCB FG, at below J$ 90 just seems too good to be true, regardless of the dividend situation. It would take us back some approximate 10 – 14 years ago, to see NCB FG at this P/E – price to earnings ratio. 

A connected party purchased 50,000 shares of NCB FG during the period November 18 – 22, 2022. Additionally, there was a further purchase of 53,403 NCB FG shares by a connected party, during the period November 21 – 23, 2022. 

We re-iterate there has been a recent uptick in seeing NCB FG, connected parties, et al, buy up shares, and even if not material amounts, it is a positive sign. 

  • Will this move bring back some earnings glory to Scotia Group Jamaica (JSE: SGJ)? 

Scotia Group Jamaica brings Ms. Anya Schnoor to the fold, and will take on the Chair role at SGJ, effective December 9, 2022. Ms. Schnoor highly respected in the financial markets, locally & overseas, from the days of PCFS, should carry an immense amount of experience, knowledge, and expertise into this role. 

We hope at ItsMoneyMark, under this new Chair, and fresh mandate, that Earnings Growth, combined with Loan Book growth is placed back on the agenda for SGJ

  • Kingston Properties Limited (JSE: KPREIT) continue their share buyback with the latest being a total of 125,000 shares of KPREIT were purchased between November 18 to November 22, 2022, at an average price of J$ 7.12/ share. 

The most recent share price has KPREIT trading on or around J$ 6.01, and near its 52-week low of J$ 5.53. To note, the current market price is approximately, 16% below where the share buybacks have been taking place, per above. 

KPREIT’s earnings have been getting stronger, and their balance sheet strength based on the moves that they have been making in recent times, but they seem to be struggling with telling their “story” or the average investor understanding their underlying assets, or structure, like a few other financial (investment structures) or quasi-financial stocks on the JSE – Jamaica Stock Exchange. 

  • Jamaica Producers (JSE: JP) on the move again! Earlier this week, it was a deal with PanJam (JSE: PJAM), and now it is a deal with Eppley (JSE: EPLY). Different deals, different structures, but demonstrates one of principals we love, a Company and Companies doing things, and getting things done!

Together, JP and EPLY have formed:

Capital Infrastructure Group Limited (“CIG”) a joint venture with Eppley Limited to invest in infrastructure projects across the Caribbean. CIG is controlled and managed jointly by Jamaica Producers Group and Eppley as equal partners and is funded by capital commitments from both companies as well as external institutional investors.

We re-iterate at ItsMoneyMark, look at and review, and stick to the Companies executing for 2023.

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